This announcement is a new approach to the industry. Usually gift cards, either electronic or physical, required stores to actually offer a gift card, but with Square’s Passbook integration it lets any Square Wallet user create a gift card for any retailer that uses Square Register to process payments.

To create the gift card, you just select a business that uses Square Register from the Square Wallet app, tap the “Gift Card” button, choose the amount you want on the gift card, and send it to anyone in the contact book. The recipient will receive an email with a link to add it to Passbook.

What’s great about this is that it really makes it easy for consumers to buy and send gift cards right from their phone. Passbook integration offers even greater advantages for businesses though. Whereas before it would cost money and time for small businesses to offer gift cards, now small businesses that use Square Register will be able to offer gift cards at a very small cost, which could potentially increase sales and customers.